TORONTO—Canadian plane-maker Bombardier announced yesterday it has sold a majority stake in its C Series passenger jet business to European aerospace giant Airbus for no cost.
U.S. rival Boeing called it a questionable deal by two state-subsidized competitors.
The move comes after lacklustre sales and after the U.S. Commerce Department imposed harsh duties on Bombardier, charging the Canadian company is selling the C Series planes in America below cost and receiving government subsidies.
The Commerce Department recently announced it would impose an 80 percent duty on top of duties of nearly 220 percent.
The case has been a win for Boeing, which brought the complaint.
Boeing has said it didn't move early enough against Airbus subsidies in the 1970s. Airbus is now a global giant.
“This looks like a questionable deal between two heavily state-subsidized competitors to skirt the recent findings of the U.S. government,” Boeing spokeman Dan Curran said in a statement.
“Our position remains that everyone should play by the same rules for free and fair trade to work,” he added.
The move by Bombardier possibly could circumvent duties being imposed on the C Series.
The C Series headquarters will remain in the Montreal area but a second assembly line for the 100- to 150-seat plane will be set up at Airbus' facility in Mobil, Ala., so the plane can be sold in the United States.
Airbus CEO Tom Enders said an aircraft produced at an U.S. Airbus facility would not be subject to duties under the pending U.S. investigation.
Enders said the acquisition extends the company's product offering into the fast-growing 100- to 150-seat market sector.
The current Airbus A320, a rival for the C Series, is for 180 passengers or more and Airbus hasn't sold an A320 in three years.
Enders said some airlines have been reluctant to purchase Bombardier's plane because of doubts the program would continue.
It has been bailed out by governments in Quebec and Canada.
“Some customers will be convinced it will be a great product and it is here to stay,” Enders noted.
The Airbus acquisition will be subject to Canadian government review but a federal official said the administration is aware of the challenges facing the C Series without a partner of the scale of Airbus.
The official noted the plane has stalled at 300 orders but with Airbus, they could get up to 6,000 orders over the next 20-30 years.
The official, who was not authorized to speak publicly about the deal, said the federal government has received a guarantee from Airbus that no jobs will be replaced or lost in Quebec because of the deal.
Enders said the talks started in August and were not motivated by what competitors are doing.
He rejected a deal to acquire the C Series three years ago but said circumstances have changed, noting the plane now is certified and receiving rave reviews.